The not-so-great news? Global business travel and event costs are on a trajectory to rise further throughout 2023 and into 2024.
The silver lining? The rate of increase will be significantly more
moderate compared to the exceptionally steep hikes experienced in 2022.
These findings are unveiled in the 2024 Global Business Travel Forecast, published by Global Business Travel Association (GBTA), together with business travel and meetings specialist CWT.
These insights come from the 2024 Global Business Travel Forecast,
published by the Global Business Travel Association (GBTA) in
partnership with business travel and meetings specialist CWT.
The surge in travel prices during 2022, driven by surging fuel costs,
labor shortages, supply chain complexities, and sizzling demand, far
exceeded some of the forecasts outlined in the previous year. However,
the report indicates that a combination of ongoing economic
uncertainties and a gradual easing of supply-side constraints will
likely lead to more restrained price increases over the next 12-18
Patrick Andersen, CEO of CWT, highlighted the powerful interplay of
demand and supply-side pressures that pushed travel prices beyond
expectations in the previous year. “Looking forward, prices seem to be
levelling off with much milder increases projected over the next 12 to
18 months. We could now be looking at the true new cost of travel.”
In 2022, the global average ticket price (ATP) for flights booked for
business travel witnessed a record price surge, soaring 72.2% YoY to
reach US$749, far surpassing the levels recorded in 2019 (US$670). While
demand has made a robust recovery, with passenger numbers swiftly
approaching pre-pandemic levels, driven mainly by pent-up leisure travel
demand, airline capacity remains constrained by labor shortages and
ongoing supply chain challenges.
Looking forward, ATP growth is likely to be more modest at 2.3% in
2023 and 1.8% in 2024, albeit from an already high base. Despite this,
many corporate buyers now have less leverage to negotiate with airlines,
given that their travel volumes remain below pre-pandemic levels.
In 2022, the Europe, Middle East, and Africa (EMEA) region recorded
the highest ATP at US$855, marking a notable 31.5% increase from the
previous year. The trend is expected to moderate in the coming years,
with ATPs forecasted to rise by 2.9% in the current year and a more
modest 2.2% in 2024.
The ATP in Asia Pacific climbed a staggering 148.7% YoY during 2022
to US$567, surpassing all other regions, even in the face of limited
international travel demand from China. In key business travel
destinations within the region, average airfares surged by 75.3% for
Australia and 79.3% for Japan in 2022, with a significant rise in the
share of long-haul tickets. As airlines – particularly major carriers
from China, continue to expand their international route capacity – the
increased supply is expected to ease price pressures in the region, with
ATPs projected to rise by 4.8% in 2023 and a further 2.7% in 2024.
Similar to air travel ATPs, the global average daily rate (ADR) for
hotel bookings surpassed previous predictions, surging 29.8% YoY to
reach US$161 in 2022. Occupancy rates have remained high, but so have
labour, energy, and F&B costs. Notably, several cities around the
world, including London, Miami, and Singapore, reported their highest
ADRs on record in 2022.
However, with the hotel construction industry yet to recover to its
pre-pandemic peak, creating supply constraints, and fewer new properties
entering the market, existing hotels can maintain their pricing power
for an extended period, even as ADR gains are slowing. Projections
anticipate ADRs to increase by an additional 4.3% in 2023, reaching
US$168, followed by a 3.6% rise to US$174 in 2024.
Among all regions, North America saw the highest growth in hotel ADRs
during 2022, rising 33.8% YoY to reach US$174. Occupancy in the region
is expected to grow at a slower pace in the second half of 2023 and 2024
due to economic concerns, with ADRs forecast to rise 4% to US$181 in
2023 and 3.3% to US$187 in 2024.
ADRs in Latin America also rose sharply by 26.9% YoY in 2022, as
several countries in the region experienced double-digit inflation. As
inflation seems to have reached its peak, ADRs are predicted to grow by
9.1% in 2023 and a further 5.6% in 2024.
Car rental supply has shrunk as companies sold vehicles during the
pandemic's demand collapse. Slow vehicle replacement due to supply chain
problems, particularly the global semiconductor shortage, inflated
vehicle prices, leading to a 9.8% YoY price increase in 2022, with a
projected 6.7% increase this year. Price growth is expected to moderate
to 2.1% in 2024.
Meetings and events
In-person events have rebounded strongly, driven by the need for
client acquisition and relationship building, difficult to achieve
virtually. Incentive trips are in high demand, aiming to motivate
employees, with a growing trend of longer and more frequent trips, as
seen by CWT Meetings & Events.
The average daily cost per attendee was US$160 in 2022. This is expected to increase to US$169 in 2023 and then US$174 in 2024.
Lead times for events remain short in this post-pandemic world.
However, organisers should now look at 2024 with a 12-month planning
cycle if they want to keep prices at a reasonable level. At the same
time, consolidating transient travel and M&E spend can give buyers
more leverage when it comes to negotiating pricing.
Event lead times remain short post-pandemic. Organisers should
consider a 12-month planning cycle for 2024 to control costs, and
consolidate transient travel and M&E spending to enhance negotiation